THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ALISON KOSIK, CNN ANCHOR: America's middle class no longer the richest in the world. I'm Alison Kosik in for Christine Romans. This is YOUR MONEY. Whether you're a Democrat, a Republican, or independent, your middle class paycheck isn't keeping up with the rest of the world. This week a stunning report from the "New York Times." For the past 14 years median incomes have grown nearly 20 percent in Canada and in Britain as well. They've also grown double digits in Ireland and the Netherlands, but in the U.S. median incomes have barely budged at all, up just 0.3 of one percent. Meantime America's rich are doing just fine. From 2009 to 2012, 95 percent of the income gains went to the top one percent of earners. Yet some billionaires have said they feel persecuted that there's a war on the one percent.

Not yet a billionaire, Poppy Harlow sat down with the world's third richest man this week, Warren Buffett. It continues to feel like that one America, two economies. You know, how does Buffett see this income divide playing out?

POPPY HARLOW, CNN MONEY CORRESPONDENT: That's a lot of what we talked to him about. We sat down with him at a New York City restaurant. He had a luncheon for the Glide Foundation, something he does to raise money for him every year. Billionaire Tom Perkins recently said the one percent is being persecuted. His fellow billionaire Sam Zell said the one percent should be emulated, not envied because, quote, "The one percent work harder." So I asked Buffett if he thinks the one percent, which he is a part of, has been attacked unfairly will.

(BEGIN VIDEOTAPE)

WARREN BUFFETT, CHAIRMAN AND CEO, BERKSHIRE HATHAWAY: I don't see anybody in the one percent who wants to leave that category and join the 99 percent because they're being persecuted.

HARLOW: Do you think that the one percent has been attacked unfairly?

BUFFETT: No, no. Well, you can always find somebody saying something unfair about any group, but, believe me, it is no great -- it's no great burden to live in the one percent or even the 0.1 of one percent at all.

HARLOW: Minimum wage is a key topic right now in this country. Should the federal minimum wage be raised?

BUFFETT: That's the toughest question you can ask me because I've thought about it for 50 years. I don't know the answer.

HARLOW: Really?

BUFFETT: Well, I just don't -- in economics you have to say, and then what? The real question is, are more people going to be better off, you know, if it is raised? And I don't know the answer to that. I know if you raise the earned income tax credit significantly that that would definitely help people who have gotten short sticks in life. But you do lose some employment as you increase the minimum wage. If you didn't I would be having $15 an hour, if you actually got the same result in all other ways, but you won't. I just don't know the answer on it. I do know that $7.25 an hour is not what should be what people are trying to live on and the country is prosperous as ours.

HARLOW: You have often warned of the consequences of income inequality. It's growing in this country. What happens if it continues to grow?

BUFFETT: Well, I think obviously at some point there could be social unrest, but there also may just be a correction of the forces that would lead it again. That would be more for the tax system than anything else. I think the natural tendency is for inequality to widen. But I don't think that's a given outcome, because there are ways that we, in particular, government, can intercede in that.

HARLOW: What can you do in a day and age where iPads can replace certain jobs, and they are?

BUFFETT: It's always good to replace jobs.

HARLOW: It's always good to replace jobs?

BUFFETT: Yes. I mean, we had -- I don't know if it was 70 percent of the people working on farms. Think of the number of jobs we got rid of. If you told people then we were going to get rid of -- there's going to be two percent or some day or three percent, they would say the world is going to go to hell. But you want to free up people for other things. I mean, the less people it takes to build a car the better off we are.

HARLOW: Do they have those other jobs to go to?

BUFFETT: That's always been the question. When the tractor came along and the combine and when they put robots in auto factories or whatever, people always say, well, where are they going to go? The market system has found places for most of them, but it does rearrange things in a big way in terms of what talents get paid for.

(END VIDEOTAPE)

HARLOW: And you know I asked Buffett if that's the case how do you build up the middle class in this country, and he admitted that is one of the biggest questions that our society is struggling with right now. Ultimately He believes, quote, "The market system will produce a growing economy." He has faith in what history has shown us. He says that the market works. Eventually it works out. You know, it was very interesting to hear how torn he is on the minimum wage debate despite being a Democrat, a big supporter of President Obama who is pushing for a $10.10 an hour minimum wage, he is torn as are so many people in this country.

KOSIK: It looks like a great interview.

HARLOW: Thank you. I appreciate it. We have a lot more of it on CNNmoney.com, CNN.com. He weighed in on the 2016 presidential race. If you want to see that you can go online.

KOSIK: OK, thanks, Poppy.

America's middle class, once the world's richest, can no longer claim that distinction. The rest of the industrialized world has been getting nice raises while Americans wages haven't budged. According to the "New York Times," after tax middle class incomes in Canada now appear to be higher than in the United States. Nicholas Kristof is a columnist for the "New York Times." Rana Foroohar is CNN's global economic analyst and assistant managing editor of "TIME."

Nick, let's start with you. There are some who say that the middle class is struggling because, to be quite honest, there aren't good jobs out there, job growth is slow, and not because America's billionaires are doing so well. Are they wrong?

NICK KRISTOF, COLUMNIST, "NEW YORK TIMES": Yes, I mean, I think they are kind of manifestly wrong in the sense that if you look at the pie, then the pie is growing, but the median American's slice has been stagnant. And you can see that if you make a comparison with France. Over the last couple of decades, France's overall economy has grown more slowly than America's, but because -- so the top one percent in America then better than the French one percent, but the bottom 99 percent in France have done better than the bottom 99 percent of Americans. And at tend of the day that is fundamentally the best test of whether an economy performs, whether a government performs, and whether society performs. And by that since the one percent have done pretty well but the overall economy and countries, frankly, have not.

KOSIK: Rana, let me ask you this. Salaries for top executives are exploding in the U.S. CEOs made unbelievably 273 times more than workers in 2012. Corporate profits are at a record high and that's as we're seeing wages sitting stagnant. So what's the danger to the U.S. economy?

RANA FOROOHAR, ASSISTANT MANAGING EDITOR, "TIME": Well, it's interesting because the U.S. economy is made up of 70 percent consumer spending. So it follows, to many economists and certainly to me, that if you have an economy in which people's wages really are stagnant, the median wage is not rising, eventually that's going to be a problem in an economy that depends on consumer spending.

And that's really why I think in some ways companies sitting on all of this cash are ultimately bankrupting themselves because eventually we're going to need to we create more jobs, more middle class jobs where people have more money in their pockets to spend on the products and services these companies produce.

KOSIK: Isn't it more that the companies are beholden to their shareholders more than anything?

FOROOHAR: Well, that's true, too. I think that one of the issues in this country, frankly, is that we do not have good corporate governance. We don't have a strong board system. I actually wish that Warren Buffett would have gone further and voted no against Coke's very massive corporate compensation program. He actually abstained because he thought that it was the wrong plan. But I think that we really need people to stand up and say, you know what, executives are being paid enough.

KOSIK: How does the middle class kind of get back its edge? Warren Buffett is saying economic growth is the answer, but is that really enough?

KRISTOF: In the long run we need economic growth and in the long run it's not going to be about redistribution but about giving people, you know, better tools. And I think there are a number of ways we can do that. And human capital is one of the most basic ones. One of the things that is really discouraging about the latest report is if you look at 60-year-olds then, in America, 60-year-olds have better education and technical skills than those in other industrialized countries. You look at 20-year-olds, then we lag near the bottom of the industrialized world. And so it's not just about the after tax median income stagnating in the U.S. and being over taken by other countries but it's also about education levels as well, which is really a look to the future.

KOSIK: Good points, Nicholas Kristof, Rana Foroohar, thanks so much for your time.

FOROOHAR: Thank you.

KRISTOF: My pleasure.

KOSIK: Many Americans are struggling to get the skills to succeed in this economy. Add in a prison sentence that's nearly impossible.

(BEGIN VIDEO CLIP)

CALEB HUNTER, TECH ARCHITECT, LAUNCHPODIUM: When you lie awake in a bunk at night in a cell that's no bigger than from here to here, you don't necessarily, you know, realize what form your dreams are going to take. But when you're actually working and working hard, you're like, this is so incredible.

(END VIDEO CLIP)

KOSIK: A remarkable journey from San Quentin to Silicon Valley, next.

(COMMERCIAL BREAK)

KOSIK: Silicon Valley, the epicenter of America's technology economy, it's where ideas are born along with newly minted billionaires. Travel about an hour up the California coast and you will find San Quentin prison, geographically close, but the two places may as well be a world away until now.

SEGALL: Inmates of San Quentin state prison. A program called The Last Mile teaches tech skills. Behind bars they learn art social media and entrepreneurship. It gives them hope of a job outside prison.

HUNTER: I'm insanely passionate about technology.

SEGALL: Caleb was released five months ago. The last time I saw you guys, you were in prison. And now we're here.

HUNTER: Yes.

SEGALL: What was it like coming out?

HUNTER: I would say surreal.

SEGALL: Even more surreal, they have coveted jobs in a start-up world at a company called LaunchPodium.

SEGALL: The company builds websites and manages social media for small businesses. For former inmates who have had little access to tech, the irony is not lost.

You're re-entering a very advanced technological world. What was the most surprising thing?

TULIO CARDOZO, LEAD DEVELOPER, LAUNCHPODIUM: The way the internet has changed over years, the proliferation of the Kardashians. You know, when I bought my phone I bought it within 24 hours of getting you and I didn't buy the text message option on it because I didn't think anybody would text message me. Yes, that didn't work very long. I had to get the texts.

HUNTER: Once it hits mainstream you hear about it while incarcerated. That's how we know about jokes and twerking.

SEGALL: You learned about twerking?

HUNTER: I didn't personally learn about twerking but, yes.

SEGALL: Despite limited access to tech and pop culture, the Last Mile program prepared them for the job. Caleb and Tulio are full time and Floyd is an entrepreneur in residence. That means he works here but also has his own start-up. For all of them this job is the one they've been striving for a long, long time.

HUNTER: It took me a moment to kind of pause and realize that I am literally living my dream.

The guys behind this have a bit of a different background, right? A lot of these are former inmates. Did that worry you at all?

ROBERT ARANDA, OWNER, CASA SANCHEZ: Not at all. Actually it is a better actually to be helping people out with a second chance, so to speak.

SEGALL: LaunchPodium founder Mike Parsons has hired several graduates from the Last Mile.

MIKE PARSONS, CEO, LAUNCHPODIUM: To a lot of people what we find interesting is it's actually very compelling for them to work with a company that does go out of its way to help people that don't necessarily get a lot of help.

HUNTER: When you lie away in a bunk at night in a cell that's no bigger than from here to here, you don't necessarily, you know, realize what form your dream is going to take. But when you're actually working and working hard and getting fantastic opportunities thrown at you left and right, you're literally like, this is -- this is so incredible.

(END VIDEOTAPE)

SEGALL: And you see that this program is really working and now all around the country prisons are looking at the Last Mile program and saying, hey, maybe we could do this, because the idea is you don't have to check boxes when you get out. Just because you have maybe a spotty past there is opportunity in technology.

KOSIK: Second phase of their lives.

SEGALL: Absolutely.

KOSIK: Laurie Segall, thanks very much.

SEGALL: Thank you.

KOSIK: Coming up, millennials are driving the hardest part of the housing market. Why young Americans moving out of mom and dad's basement could mean bigger real estate returns for everybody else.

Netflix prices are about to go up. The company says it will soon charge new customers $1 or $2 more a month for streaming, but existing subscribers can keep their current rate for a generous time period.

Five former Buffalo Bills cheerleaders are suing the team for what they call unfair pay and demeaning treatment. This follows similar lawsuits filed by cheerleaders from the Oakland Raiders and the Cincinnati Bengals.

Made in China -- Tesla plans to begin manufacturing electric cars in China in the next three to four years. China's government is encouraging the adoption of electric cars as country faces a growing air pollution problem.

The recall crisis at General Motors almost wiped out first quarter profits. The company made just $108 million in the first three months of year and says fixing all those recalled cars will cost $1.3 billion.

(END VIDEOTAPE)

KOSIK: Time now for the buzz. A stock split, a price hike, and Tony Soprano on demand. CNN Money's Paul La Monica is right here with me. Let's put 90 seconds on the clock. Let's talk Netflix first. We heard how Netflix raising prices for new subscribers, but it's still a darling of Wall Street.

PAUL LA MONICA, ASSISTANT MANAGING EDITOR, CNNMONEY: You look at the 12-month chart, it's a phenomenal stock. It's come back a little bit this year. I think people are worried about the valuation with reason, but Netflix had great earnings and that's why the stock went up earlier in the week. But when you look at now versus Amazon, another momentum stock, Netflix actually took a tumble after Amazon announced that it had a great deal with HBO that's going to bring some of the older HBO shows like "Sopranos," "The Wire," to prime customers. Netflix doesn't have any of the HBO content. That might be a potential problem for people thinking, do I subscribe to Netflix over Amazon Prime? HBO might be a difference maker.

KOSIK: Apple also making a lot of headlines with its earnings as well.

LA MONICA: Yes. And the funny thing about Apple earnings is they almost didn't seem to matter. No one really paid attention to what the company's profits and sales were. It's all about stock split. That's going to bring the price down from the $560 range to $80 because it's a seven for one split effective in June. They're increasing their stock buyback to make Carl Icahn happy. They're raising their dividend. The sad thing is, this is a slow growth boring tech stock like IBM and Microsoft now. They're just raising dividends and increasing buybacks. They're not innovating as much.

KOSIK: But more accessible stock-wise to the average investor at $75, $80 apiece.

LA MONICA: Yes. And I think that could be helpful. Priceline is trading at $1,200 a share and the stock is up 75 percent in the past 12 months. It hasn't been held back by an even higher stock price.

KOSIK: Right. Paul La Monica, thanks so much for your time.

The hottest thing in housing right now is renting. Millennials are finally moving out of mom and dad's basement. Cities are the cool place to live, and builders have yet to catch up with demand. But Christine Romans tells us why the single family housing market may also get a boost from this trend.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN ANCHOR: It's the fastest growing part of the housing market you may not see in your neighborhood. New apartment buildings popping up everywhere, now with the largest share of total new home construction since the 1970s. New rental apartment projects surged 56 percent in 2011, 36 percent in 2012, 25 percent last year, and they're forecast to rise nine percent this year.

So has this rental rise reached the top floor? Experts say, not yet. Why? Call it housing's millennial effect. Unemployment still stubbornly high for younger Americans, and many already owe tens of thousands in student loans. When millennials find a job they just want a roof over their head, not a mortgage. Plus, credit is tight, so buying is tough, a down payment even tougher.

Also, millennials value mobility, and urban areas often convenience. That demand pushing up rent prices across the U.S. Rent is up three percent over the past year and nearly twice that in renter heavy cities like San Jose, San Francisco, Seattle, and Boston. But long- term, the millennial affect could produce a familiar result. As this generation grows up, has children, finds more steady employment, the need for more space and the financial prospects of owning a home could push millennials into single family homes and lift the housing market for everyone else.

Christine Romans, CNN, New York.

(END VIDEOTAPE)

KOSIK: Coming up, we take you inside a classroom in one of America's richest and most dangerous cities. Is money the key to bridging the education gap in Chicago?

(COMMERCIAL BREAK)

KOSIK: The education debate in this country starts and ends with money, how much schools have, where they get it, and what they spend it on. But at Fenger High School in the south side of Chicago, Principal Elizabeth Dozier's federal funding is running out. You may have seen her on CNN's original series "Chicagoland." Christine Romans sat down with Principal Dozier at Fenger High, and Christine asked what her students need to graduate and be successful. (BEGIN VIDEOTAPE)

ELIZABETH DOZIER, PRINCIPAL, CHRISTIAN FENGER ACADEMY HIGH SCHOOL: I think it's a variety of things. I think it's exposures to arts education. So often we talk about one segment, but it's a myriad of things. Art education is reading and writing. It's for our kids especially it's getting out of neighborhood and having exposure to different things. Urban Alliance, one of our school partners, has been phenomenal to connecting kids to corporate partners downtown, giving them internships. So I think it's a wide array of things that make a well-wounded child and make them be able to see within themselves a promise and possibility to want something more.

ROMANS: These things take money and creative use of money. Part of the season -- the series from "Chicagoland" has been sort of what you're going to do as this money runs out, this big grant runs out. Tell me about the creative ways you use and get money and how money is always forefront on your mind when you're in public education.

DOZIER: Yes. I think that Michelle Obama said when she came to Chicago not too long ago about resources do matter. We had our grant for four years, at $1.6 million at four years. We're able to be more creative. Everything from lowering class sizes to deploying full-time advocates to go to the homes to make sure there's a connection to home and school if a child isn't showing up.

ROMANS: Sending someone to the home?

DOZIER: Yes.

ROMANS: Wow.

DOZIER: After school programs, traditional after school programs but also programs that focus on mentoring youth who might not necessarily want to stay for a basketball program but who might need jobs, those types of things. So all this kind of array of things.

This year we did not have that funding. And so the start of the year was a difficult and challenging year for us because the bottom line is that kids need those types of supports in order to grow. One example is I think our read 180 program that we had that we weren't able to fund this year for kids who come in significantly below in terms of reading scores.

(END VIDEOTAPE)

KOSIK: Innovation is helping at Fenger and alum helped start a fundraising effort on a website called "Crowd Rise." So far it's raised more than $85,000 for the school.

Thank you for spending Saturday smart with us on YOUR MONEY. This book, Thomas Piketty's "Capital in the 21st Century" is Amazon's number one seller, but it's like a phone book and it's out of stock in some cases. Not to worry. Head to CNNmoney.com and you will find Christine Romans interviewing the economist who is behind the phenomenon that just may change the income inequality debate. That's it for me, but don't go anywhere. CNN Newsroom starts right now.